Six winners for NRF Early Stage Venture Fund

Earlier this year, on 28 March 2008, the Prime Minister of Singapore announced a S$350 million program to support a slew of initiatives and schemes under the National Framework for Innovation and Enterprise (NFIE), driven by the National Research Foundation (NRF). Out of that bunch of ideas, one of them was to seed up to 5 early-stage venture funds with a fund of S$50 million to support Singapore-based early stage technology startups.

Well, the verdict are out, and the announcement has been made at a press conference earlier today at 2:15pm at Marriott Hotel. In the end, the folks from NRF chose to seed six venture funds for a total of S$60 million, $10 million more than planned.

In no order of merit (apart from alphabetical), they are:

1. BioVeda Capital II
2. NanoStart Asia
3. Raffles Venture Partners
4. Tamarix Capital
5. Upstream-Expara
6. Walden International

This represents the first fresh wave of funding for venture capital since the mega $1.2 billion Technopreneurship Innovation Fund back in 2001 that resulted in many VCs, but meagre local investment activity. It’s happy news and a significant development, since it’s no secret that while we have over 150 VCs and S$16 billion managed out of Singapore, I could count those actively investing in Singapore with 1 hand. Of course, with government money comes strings (developmental in nature, and most certainly more so than the usual private-sector LPs), some of which includes a decent hurdle, and the requirement for investments to be made into Singapore-based entities.

The largest challenge facing these six fund managers would be to source for sufficiently high quality startups and entrepreneurs to infuse into the local ecosystem. Within the TMT (or Infocomm) sector, my opinion is that there’s honestly not enough entrepreneurial experience recycling within to surface enough ‘home runs’ to cover the fund, much less talk about the ‘next big thing’.

One of the biggest challenges facing young start-up companies in Singapore is the dearth of venture funds investing in companies during the early stages of their development. This is because the risk of failure is very high at this stage and the entrepreneurs require guidance and nurturing in addition to funding, even though the returns on investment would be correspondingly greater if the companies succeed. The Early Stage Venture Funding scheme seeks to catalyse the set-up of several early stage venture capital funds. Under this scheme, NRF will invest S$10 million in each of the selected VCs, who are required to raise a matching sum of at least S$10 million from third-party investors to invest in locally-based start-ups. The fund managers will be given an option to buy out NRF’s investment within 5 years at the price of 1.25 times NRF’s original investment.

Of course, while more money certainly helps, I’m not so sure if it’ll prove to be the silver bullet Singapore needs. Like Rome, Silicon Valley wasn’t built in a day, and while Singapore doesn’t have that much time on the clock as it races towards the same finishing line as India and China, people still need to give VCs and entrepreneurs the space they need to do what they do best.

Patience is a virtue – let’s hope the Government has enough of that this time round to reap the fruits of two generations of entrepreneurs.

Related posts:

1. Early-stage Capital Crunch: Chicken or the Egg?
2. Erasmic, Accel merge to form India fund
3. Walden International invests S$2m in Brandtology
4. Andreessen Horowitz raises US$300m in bleak times
5. Singapore’s Uncoordinated Initiatives for Entrepreneurs

Tagged as: Bioveda, Giza, Nanostart, NRF, Raffles Venture Partners, Singapore, Walden